Separating the income/expenditure.....i.e., recording £2706 within repairs and £2706 within 'other income', makes no difference to the net result although that is what I would do.
The £549 however should probably be posted to the BS...especially of there is a risk that this needs to be paid back. It could be reversed to deposits held or other creditors account. However, if this amount was deliberately charged.....perhaps to take into account the landlords time in dealing with the repairs, then I would leave it in 'other income'.
There might be a time where you would like to analyse such expenses and whether or not the repairs were paid by the tentants, I think it would be better to show the actual cost rather than having a credit balance in the expense account.
